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The network neutrality / common carriage debate is one of the
most important debates of our time. At stake is the freedom to
innovate, the freedom to listen, and the freedom to speak. To
date, arguments for or against common carriage have focused
largely on the relationship between Internet service providers
and content creators, but a new threat is emerging.

Companies like Facebook, Twitter and LinkedIn have unlocked new ways for people to
connect, curate, and consume. They have changed and continue to
change how we interact with the web - how content is distributed,
discovered, and delivered. But with the emergence of this new
social layer comes a threat that rivals that posed by the great
information monopolies of the 20th century - AT&T, the Radio
Trust and the Motion Picture Patents Company, companies known for
price gouging, anti-competitive behavior, and the stifling of
innovation.

I recently finished Tim Wu’s "The Master Switch: The Rise and
Fall of Information Empire." For anyone interested in
network neutrality, this book is an incredible primer. Beyond
presenting a thoughtful analysis and historical review of the
information industry, Wu provides a compelling read - one might
even call it a page-turner! If you haven’t yet, go buy
it, and read it.

Network Neutrality

If you're familiar with the basics of network neutrality, feel
free to jump to my
main argument below. If not, let’s start with a definition for
common carriage.

At the heart of common carriage is the idea that certain
businesses are either so intimately connected, even essential,
to the public good, or so inherently powerful—imagine the water
or electric utilities—that they must be compelled to conduct
their affairs in a nondiscriminatory way.

As a simple example, if a man operates the only ferry over to
town, that simple boatman is in a position of great power over
other sectors of the economy, even the sovereign authorities.
If, for example, he decided to charge one butcher more than
another to carry his goods, this operator could bankrupt the
one who didn’t enjoy his favor. The boatman is thus deemed to
bear responsibilities beyond those of most ordinary businesses.

So what does this have to do with social networks like
Facebook
or Twitter?

Distributors, owners of "the pipes," will always have an
incentive to maximize profit by way of price discrimination,
or, if they choose to produce their own content, to prioritize
their own goods ahead of or instead of those of their
competitors.

Social networks are a critical layer
of infrastructure for a wide variety of applications
and content. Unlike physical networks, opportunities for
lock-in emerge not at the physical layer but at the social
layer: our connections. In other words, they do not wield
monopoly control by dint of massive up-front fixed costs but
rather by the accumulated valuecontributed by
users in the form of the social graph!

Without access to our social connections, applications like
Zynga, Turntable, and Spotify face significant barriers to entry -
both in terms of the product experience that they are able to
deliver and their path to adoption via access to social
promotional channels.

But will these social networks really exert their platform
authority at the expense of competitors and users? The answer
is that they already are.

Reflecting on Wu’s review of information monopolies, one can
extract two primary tendencies manifest in countless examples
throughout history. First, like all institutions they follow
a law of self-preservation. If the ferry owner senses a threat to
his monopoly in an innovation outside of his control, he will do
everything in his power to acquire or squash it.

Second, information monopolies will always act to maximize
profits, and will often do so at the expense of their “riders.”
If a passenger on the network is seen to reap significant
profits on the back of the network, it is in the short-term
interest of the monopoly to ransom network access for a share
of those profits.

See:

The Motion Picture Patents Company consolidating
control over film production and distribution by
ransoming access to patent licenses and buying
up independent theaters, ultimately leading to the
independents' flight to Hollywood.

The tenuous relationship between distribution channels and that
which is being distributed is summarized neatly by Wu:

You cannot serve two masters, and the objectives of creating
information are often at odds with those of disseminating it.

Ibid., p. 306.

Social Network Neutrality

So what does this have to do with social networks like
Facebook
or Twitter?

Distributors, owners of "the pipes," will always have an
incentive to maximize profit by way of price discrimination,
or, if they choose to produce their own content, to prioritize
their own goods ahead of or instead of those of their
competitors.

Social networks are a critical layer
of infrastructure for a wide variety of applications
and content. Unlike physical networks, opportunities for
lock-in emerge not at the physical layer but at the social
layer: our connections. In other words, they do not wield
monopoly control by dint of massive up-front fixed costs but
rather by the accumulated valuecontributed by
users in the form of the social graph!

Without access to our social connections, applications like
Zynga, Turntable, and Spotify face significant barriers to entry -
both in terms of the product experience that they are able to
deliver and their path to adoption via access to social
promotional channels.

But will these social networks really exert their platform
authority at the expense of competitors and users? The answer
is that they already are.

Take the social gaming company Zynga, for example. The pace of Zynga's
growth has been mind-boggling. A significant portion of
Facebook's users spend a significant portion of their time on
Facebook within Zynga's games. When Facebook sensed a
competitive threat emerging on their platform, they chose to
reduce that threat by exerting their platform authority.
Zynga
was forced to give up 30%
of their revenue to Facebook so that Facebook’s users could
“benefit” from one standardized currency experience. How’s this
for a Risk Factor, from Zynga’s S-1:

Facebook is the primary distribution, marketing, promotion
and payment platform for our social games. We generate
substantially all of our revenue and players through the
Facebook platform and expect to continue to do so for the
foreseeable future. Facebook and other platforms have broad
discretion to change their platforms, terms of service and
other policies with respect to us or other developers, and
those changes may be unfavorable to us.

Facebook has even gone to battle with
Google over data portability. The most recent
challenge coming by way of a Chrome Extension that allows you to import
your Facebook friends into Google’s new social network,
Google+.

Playing the white knight (or social underdog), Google has tended to act in the interest of
data portability, but Google’s policy of “we’ll let you
import our contacts if you let us import your contacts,” reeks
of data protectionism, and
should be viewed with a healthy dose of skepticism, given
Google’s own checkered past.

We need to move to a less fragmented world, where every user
can experience Twitter in a consistent way. This is
already happening organically – the number and market share
of consumer client apps that are not owned or operated by
Twitter has been shrinking.

A “less fragmented world” sounds like code for “consolidation.”
Can Twitter really innovate faster than thousands of
third-party developers? Can LinkedIn
replace the value that companies like BranchOut and Monster
were planning on providing to businesses and users? We’ll never
find out, because Twitter and LinkedIn can respond to any such
emergent innovation by shutting down access to their API.

What happens when an information monopoly attempts to
centralize innovation? No organization has done it better than
Bell Labs. They were so successful that they
invented magnetic tape, used to power the computer revolution,
as early as 1934!

"The impressive technical successes of Bell
Labs’ scientists and engineers ... were hidden by the upper
management of both Bell Labs and AT&T.” AT&T “refused
to develop magnetic recording for consumer use and actively
discouraged its development and use by others.” Eventually
magnetic tape would come to America via imports of foreign
technology, mainly German.

But why would company management bury such an important and
commercially valuable discovery? What were they afraid of?
The answer, rather surreal, is evident in the corporate
memoranda, also unearthed by Clark, imposing the research
ban. AT&T firmly believed that the answering machine, and
its magnetic tapes, would lead the public to abandon the
telephone.

Ibid. p. 106.

As a result of AT&T's coverup, magnetic tape would not be
"discovered" until the 1990's. Holy crap! Anyone else
terrified?

So what happens next?

Certainly these companies should be able to reap the rewards of
the network that they’ve built, but when those rewards come at
the expense of the user experience, the troubling effects of
lock-in become apparent.

This is just the beginning. What happens when Facebook or
Twitter decide that it is too 'confusing' for users to see
photos from Instagram posted to their network, instead of
through Facebook Photos? What happens when Facebook decides
that Foursquare check-ins next to Facebook Places check-ins are
detrimental to the user experience? Or that Groupon's daily
deals shared through the Facebook platform are confusing for
users who are most eager to find Facebook's deals?

Facebook is the primary distribution, marketing, promotion
and payment platform for our social games. We generate
substantially all of our revenue and players through the
Facebook platform and expect to continue to do so for the
foreseeable future. Facebook and other platforms have broad
discretion to change their platforms, terms of service and
other policies with respect to us or other developers, and
those changes may be unfavorable to us.

Facebook has even gone to battle with
Google over data portability. The most recent
challenge coming by way of a Chrome Extension that allows you to import
your Facebook friends into Google’s new social network,
Google+.

Playing the white knight (or social underdog), Google has tended to act in the interest of
data portability, but Google’s policy of “we’ll let you
import our contacts if you let us import your contacts,” reeks
of data protectionism, and
should be viewed with a healthy dose of skepticism, given
Google’s own checkered past.

We need to move to a less fragmented world, where every user
can experience Twitter in a consistent way. This is
already happening organically – the number and market share
of consumer client apps that are not owned or operated by
Twitter has been shrinking.

A “less fragmented world” sounds like code for “consolidation.”
Can Twitter really innovate faster than thousands of
third-party developers? Can LinkedIn
replace the value that companies like BranchOut and Monster
were planning on providing to businesses and users? We’ll never
find out, because Twitter and LinkedIn can respond to any such
emergent innovation by shutting down access to their API.

What happens when an information monopoly attempts to
centralize innovation? No organization has done it better than
Bell Labs. They were so successful that they
invented magnetic tape, used to power the computer revolution,
as early as 1934!

"The impressive technical successes of Bell
Labs’ scientists and engineers ... were hidden by the upper
management of both Bell Labs and AT&T.” AT&T “refused
to develop magnetic recording for consumer use and actively
discouraged its development and use by others.” Eventually
magnetic tape would come to America via imports of foreign
technology, mainly German.

But why would company management bury such an important and
commercially valuable discovery? What were they afraid of?
The answer, rather surreal, is evident in the corporate
memoranda, also unearthed by Clark, imposing the research
ban. AT&T firmly believed that the answering machine, and
its magnetic tapes, would lead the public to abandon the
telephone.

Ibid. p. 106.

As a result of AT&T's coverup, magnetic tape would not be
"discovered" until the 1990's. Holy crap! Anyone else
terrified?

So what happens next?

Certainly these companies should be able to reap the rewards of
the network that they’ve built, but when those rewards come at
the expense of the user experience, the troubling effects of
lock-in become apparent.

This is just the beginning. What happens when Facebook or
Twitter decide that it is too 'confusing' for users to see
photos from Instagram posted to their network, instead of
through Facebook Photos? What happens when Facebook decides
that Foursquare check-ins next to Facebook Places check-ins are
detrimental to the user experience? Or that Groupon's daily
deals shared through the Facebook platform are confusing for
users who are most eager to find Facebook's deals?

As these networks settle on and begin to expand their
business models, the definition of "competitor" will
expand commensurately. Monopoly power of these large networks,
as owners of our now primary channels for distribution and
communication, will only increase as they become an ever larger
part of our lives.

It’s time to stop seeing these companies as mere applications.
They are the 21st century version of AT&T, of RCA, of the
Motion Picture Patents Company. The infrastructure of the
social web has been consolidated into the hands of a few. With
consolidation comes control, and with control comes an
incentive to wield it over those deemed competitive threats to
the ultimate prerogative: preservation of control.

Government agencies responsible for policing
antitrust clearly have these
companies on their radar, but history
has shown that government is as capable of enabling information
monopolies as it is of squashing them. Users must stand and be
counted. We must demand portability, and we should vote with
our attention when it is not delivered.